Palo Alto Weekly

On Deadline: Redefining 'Silicon Valley' — it's doing great in most areas despite some big gaps

by Jay Thorwaldson

Silicon Valley — however one defines it — is doing just great, thank you, except for some deeply worrisome gaps.

The Valley and broader region is leading the state and nation in job growth, inventiveness, investment, creation of new businesses, and it continues to be a great place overall, according to a new report out this week.

But there are exceptions. Lower-income families are growing in number faster than better-off families, the "middle class" continues to shrink, the transportation system is a tangled and confusing mess, and the Valley faces renewed challenges from other areas that want slices of Silicon Valley's economic pie.

That is the core message of a major annual conference being held today (Friday, Feb. 8) in San Jose, the self-proclaimed and historic "capital" of Silicon Valley (notwithstanding Palo Alto's perception of being the Valley's heart and genesis).

The conference is the presentation of a comprehensive report, the "Index of Silicon Valley," by two major entities: Joint Venture Silicon Valley and the Silicon Valley Community Foundation.

Leaders of the two sponsoring organizations, flanked by consultants who helped put together the Index, unveiled the 77-page report, which includes a "Special Analysis" of the valley trends.

The document is condensed, heavy with data about what happened in 2012 not just in economics but in health, the environment, education and generally.

Besides the Good News about job and economic growth, the leaders slipped in two important announcements: (1) that as of about 10 a.m. Tuesday the entire Index went live online (at www.siliconvalleyindex.org), and (2) that the U.S. Patent Office will soon be opening an office in the Valley, reflecting the richness of patent activity in the area and years of lobbying and encouragement by local leaders.

But the big headline out of the briefing was that Silicon Valley — always a bit befuddling to define — is changing rapidly, becoming more regional to the point that the mayor of San Francisco even proclaimed recently that his city was fast becoming the "capital of Silicon Valley."

Say what? San Francisco isn't even in a valley.

"We now have two major metropolitan areas ... that are basically at war over the identity of Silicon Valley," Emmett D. Carson, CEO and president of the Silicon Valley Community Foundation, said of San Jose and San Francisco.

So the Special Analysis "focuses on regionalism" and an emerging new definition of Silicon Valley.

"One of the things I get asked the most about is, 'What is Silicon Valley?,' 'Where is it?,' 'What are its geographic boundaries?'" Carson said, highlighting "the most telling picture" (on page 53 of the Index) of how people commute between the major areas.

Historically, Silicon Valley was initially defined as essentially Santa Clara County. Then it spilled into San Mateo County, and encompassed Scotts Valley and Fremont. Most of the "Silicon Valley" data in the Index covers that region, with San Francisco data separate.

"Five years ago that was not the case; 10 years ago that was not the case. But today we are seeing a regional economy that is being created that I think is symbolized by this chart of the transportation patterns," Carson said.

Every workday, the chart shows, 41,919 persons travel to San Mateo County and 13,503 to San Francisco. At the same time, 55,044 persons travel out of San Mateo County to Santa Clara County while 75,426 travel to and from San Francisco. In return, 41,430 San Franciscans travel to San Mateo County and 21,644 to Santa Clara County.

Combined, that is a stunning economic tidal flow, more person miles traveled in one day than in most of the great migrations of history in a century.

"It's the regional dynamics that are being created of this place," Carson continued, noting that inter-city battles over the location of sports teams make virtually no difference in the regional framework or economy.

"Think about the oddness of a report that has just been released from the Brookings Institution that says Silicon Valley is number one in patents but San Francisco is number two. It is one regional community.

"And we are seeing it happen right before us."

Then he got to the meat:

"That's why we've got to figure out regionalism.

"That's why we have to understand that we can't continue to have 27 separate transportation systems that are so ineffective that our major corporations are creating Google buses that run from San Francisco down to Google. If you're on one of those lines that has one of those Google buses your housing price is worth more because the public transportation system is antiquated in terms of its logic for serving this regional reality."

Russ Hancock, president and CEO of Joint Venture Silicon Valley, dug into some of the detail of the Index, laden with charts, facts, statistics, trends.

A relative handful of journalists at the briefing asked questions about the decline of venture capital investments in some areas and even a new way of raising funds, called "crowd funding." That is a method of raising funds via the Internet, using systems such as JumpStarter or GoFundMe online to get people to send money for ideas or special personal situations.

"It's impressive. It's very impressive. Some might even call it cause for euphoria," Hancock said of the economic and jobs data.

Of the 92,000 new jobs in the Bay Area, 42,000 were generated by Silicon Valley, he said, using the old definition of the South Bay and Peninsula valley.

"But that definition is up for grabs," he noted.

The Valley produced about 92,000 new jobs, the most since the 129,000 jobs created at the peak of the dot.com boom. San Francisco generated about 18,000 jobs and the East Bay, including Oakland, generated more than 20,000 jobs.

Great news for those who got them. But, Hancock cautioned, the number of persons using food stamps increased and middle-income "middle class" families — once the bulwark of the economy — shrank, continuing a trend, lost between "stratospherically" rich individuals and a growing lower-income group.

Fascinating reading, free at www.siliconvalleyindex.com.

Former Weekly Editor Jay Thorwaldson can be emailed at jthorwaldson@paweekly.com with a copy to jaythor@well.com. He also writes blogs posted on the Weekly's community website, www.PaloAltoOnline.com (below Town Square).

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